Finance Videos

Consumers shift focus to Europe

April 24 - Latest results from Unilever, Pernod and other major brands point to softening consumer demand in emerging markets. But is the European shopper on the rise again? Hayley Platt reports.

TRANSCRIPT +

Investors used to rub their hands together at the opportunities of emerging markets like China and India.
Lately that's not entirely the case.
A slowdown in some economies and waning demand has hit some of the world's biggest firms.
Consumer goods giant Unilever is one of them.
Although overall first quarter profits came in higher than expected, the maker of Dove hand cream and Carte D'Or ice cream delivered weaker sales in some emerging markets.
Could Europe now be more of an interesting focus?
IG's Chris Beauchamp believes so.
SOUNDBITE: Chris Beauchamp, market analyst, IG, saying (English):
"The Russian economy is going through a major issue at the moment given they've slashed GDP estimates anyway. China, still those worries about a slowdown. Although the Communist party is dedicated to keeping consumption high, they're still going to have an uphill task to keep that supported, but it does look as if the focus is shifting back towards Europe."
It seems to be working for Heineken.
Although sales growth at the world's largest brewer at the beginning of the year was lower than expected, volume's and revenues in parts of Europe and Africa improved.
SOUNDBITE: Chris Beauchamp, market analyst, IG, saying (English):
"If you look at Pernod and Heineken, they're all saying that Europe is becoming more of an interesting focus and also that we've got some commentary that the U.S. is becoming more important as well. I don't think it's entirely a blanket worry about emerging markets because we're seeing growth. Heineken certainly are doing well in Nigeria and Brazil, two of its really key markets."
Even in Europe, there are local challenges.
The UK's Premier Foods, owner of Hovis and Mr Kipling cakes, say they're suffering from increased competition in groceries - and that's squeezing margins.
Sales in the first quarter fell sharply by more than 6 percent.
And some of its other brands including Homepride and Angel Delight were reportedly down as much as 10 percent.
SOUNDBITE: Chris Beauchamp, market analyst, IG, saying (English):
"Consumers are becoming far more discerning really in what they're buying and as you're seeing increased incomes in Europe then you're going to have a shift towards some of more higher-end products. And companies need to be alive to that sort of development really."
Asian markets have been the engines of growth for some time - that's unlikely to change in a big way.
But the balance does appear to be tipping closer towards the older more developed markets of Europe - for now at least.

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